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MESSAGE
OF
GOVERNOR CONRAD BAKER.

DELIVERED JANUARY 8, 1869.

Gentlemen of the Senate and House of Representatives:

The people of Indiana, in ordaining their Constitution, expressed their gratitude to Almighty God for the free exercise of the right to choose their own form of government, and may I not, in commencing the performance of the duty for which we are now assembled, invite you to join with me in ascriptions of praise and thanksgiving to the same beneficent Father, for permitting us to meet under such auspicious circumstances, to engage for a season in the performance of duties pertaining to the practical execution of powers thus ordained.

The labors of the husbandman, during the year that has just closed, have been rewarded with plentiful harvests; the health of our people has, in the main, been mercifully preserved; peace has dwelt within our gates, and a reasonable degree of prosperity within our homes: and although the wise and the good cannot fail to regret the existence of many evils in society, detrimental, alike, to individual and social; prosperity, notwithstanding these evils, we may congratulate ourselves that the age in which we live is an age of progress, and that the mass of our people are gradually, but surely, advancing toward a higher and a better civilization.

"The unity of government which constitutes us one people," so long threatened by rebellion and its sequences, would seem to be reestablished on enduring foundations; and if we, and those who shall come after us, are faithful to the high trusts confided to us, we may page: 2[View Page 2]Switch to Image ModeCLOSE Page 2 well hope that our prosperity, State and National, will continue to remote generations of our posterity.

GOVERNOR JOSEPH A. WRIGHT.

Although it is a matter of which you are all cognizant, I would feel that I had failed to perform my duty if I omitted officially to call your attention to the fact that since the adjournment of the last session of the General Assembly, one of the most distinguished of my predecessors--who for many years filled a large and honorable place in the political history of this State, and who enjoyed, in no common degree, the confidence and affections of its people--has departed this life. I allude, of course, to the late Joseph A. Wright. He died at Berlin, the Prussian seat of government, on the 11th day of May, 1867, being, at the time of his death, the accredited Minister of the United States to that Court. The high character, superior abilities, and long and honorable identification of Governor Wright with the public history of Indiana suggests that the General Assembly should take such action, in view of his departure, as will assure the people, and especially the surviving members of his bereaved family, that his long, faithful, upright, and valuable public services are held in grateful remembrance. Before dismissing this subject, I desire to call your attention to the fact that, with the single exception of the late Governor A. P. Willard, the State does not possess a portrait of one of its deceased executive officers. It seems to me that the State Library could receive no more appropriate adornment than would be afforded by the likenesses of its early Governors who have passed from the scenes of earth.

STATE DEBT.

The State's outstanding indebtedness, for convenience of reference, may be appropriately classified as Foreign and Domestic. That which I shall in this communication designate as the Foreign Debt, consists,

1. Of the two and-a-half and five per cent. certificates of stock issued under the adjustment made between the State and a majority of her creditors, in pursuance of the legislation of 1846 and 1847, commonly called the "Butler Bill."
2. Of six per cent. bonds issued under the legislation of 1861, for war purposes, and commonly called the "War Loan Bonds."

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The Domestic Debt of the State is that which she owes to her educational institutions, and consists,

1. Of the Vincennes University Bonds.
2. Of the State's indebtedness to the Common School Fund for moneys belonging to that fund and used by the State in the redemption of her two-and-a-half and five per cent, certificates of stock, and for other State purposes. This indebtedness is included in four non-negotiable bonds of the State, executed by authority of law, and payable to the School Fund, with interest at six per cent., payable semi-annually.

According to this classification, the Foreign Debt of the State was, on the 31st day of October, 1867, as stated in the Auditor's report of that date, as follows, viz:

The Domestic Debt of the State was, at the same date, October 31st, 1867, as stated in the same report, as follows:

In making an exhibit of the amount of the Foreign State Debt, in the report alluded to, no Two-and-a-half per cent. Certificates were reported as then outstanding.

As the holders of these had been notified to present them at the State Agency in New York for payment, and as the money was there for the redemption of all of them, they were treated by that report as redeemed. There was in point of fact, however, at the date of that report, and still is--as will hereafter be explained--a small balance of these Two-and-a-half per cent. Certificates outstanding, but they have ceased to bear interest, as the money is in the Treasury of the Agency wherewith to redeem them, and the holders have been duly notified to present them.

In the report of the Auditor of State, for the fiscal year ending page: 4[View Page 4]Switch to Image ModeCLOSE Page 4 October 31, 1868, herewith respectfully submitted, the Foreign Debt of the State is thus stated, viz:

This exhibit shows that there was a reduction during the fiscal year 1668 of the amount cf the Five per cent. Certificates and War-Loan Bonds outstanding of $458,311.66; or, deducting the Two-and-a-half per cent. Certificates, amounting to $7,260.13--not stated in the report of 1867--a net reduction of the Foreign Debt during the fiscal year 1868 of $451,051.53.

Since the end of the fiscal year, (October 31, 1868,) Five per cent Stocks have been redeemed at par to the amount of $455,795, and War-Loan Bonds have been redeemed in like mariner to the amount of $3,000--making, together, $458,795.

The Foreign Debt of the State, as it now stands, exclusive of the old Internal Improvement Bonds--which will be subsequently mentioned--may be stated as follows, viz :

Towards the payment of this we have in the General Treasury, belonging to the State Debt Sinking Fund, and exclusively applicable to that purpose, the sum of $247,091.72, and in the Treasury of the Agency at New York, $43,200.97, making together $290,292.69, and leaving the amount of Five and Two-and-a-half per cent. Certificates and War-Loan Bonds unprovided for $2,791,097.10, and being equivalent to a reduction of our Foreign Debt, since the commencement of the fiscal year 1868, of $1,200,139.23, all of which was accomplished without contracting any new debt or liability by the process.

The Domestic Debt of the State, as stated in the Auditor's report for the fiscal year ending October 31st, 1868, is as follows, viz:

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This shows an increase in the Domestic Debt of the State during the fiscal year 1868, of $222,234.00. This increase was occasioned by the issuing of two non-negotiable bonds to the School Fund:

But front this gross increase is to be deducted $2,000 on account of the redaction of the University Bonds during the year, which leaves the net increase of the Domestic Debt at $222,234.00, as before stated.

In his last message to the General Assembly, Governor Weight, in 1857, in recommending an abandonment of the old system by which the trust funds were loaned to individuals on mortgage security, and urging the adoption of the plan now being carried out, of investing these trust funds in the purchase of the Five and Two-and-a-half per cent. Certificates of stock, used the following language, viz:

"The present mode of investing the Sinking Fund is chiefly in mortgages upon real estate to our citizens. The facilities thus afforded for borrowing money create a spirit of speculation, often terminating in bankruptcy and ruin to the borrower. The long list of lands forfeited to the Fund for non payment of principal and interest admonishes us to seek for some other mode of investment which shall be equally safe and productive.

"I have repeatedly suggested, and now renew the recommendation, that the Sinking Fund Commissioners should be authorized to invest this Fund, from time to time as it may accumulate in their hands, in the bonds of the State, under appropriate limitations as to principal and market value, thus changing the character of our obligations from a foreign to a domestic debt, the interest upon which, when collected from our people, shall immediately be reimbursed to them in the accomplishment of that high and most ennobling object of human government--the education of our youth. It is a high trust, and will be most truly performed when we shall connect the education of our children with the character, integrity, and honor of they State."

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What Governor Wright so forcibly recommended has, to a considerable extent, been accomplished under the legislation inaugurated at the special session of the General Assembly in 1865, and it is hoped that it will not be abandoned to return to a system which expedience has condemned.

The non-negotiable bonds which have been issued to the School Fund should be considered as a perpetual loan to the State. Instead of taxing the people to pay a debt which they virtually owe to themselves, in order that it may be lent on mortgage security to a chosen few, let it remain a loan to all for the benefit of all.

I have intentionally excluded from the two foregoing classes of the public debt a comparatively small balance of old Internal Improvement Bonds, which the holders foiled or refused to surrender under the "Butler Bill," and upon which no interest has been paid since 1841, except as hereinafter stated.

Notwithstanding the fact that no interest has been paid since 1841 on these bonds, they have annually appeared in the reports of the Auditor of State as a part of the public indebtedness. From 1864 to 1867 inclusive, the amount of these bonds outstanding was stated at $253,000. The bonds thus reported were each of the denomination of $1,000, and consequently there were 353 in all. Eight of these bonds were held by the Board of Sinking Fund Commissioners, in trust for the Common School Fund, when that Board ceased to exist, and its effects were passed into the hands of the Auditor of State under the legislation adopted at the special session of 1865.

These eight bonds had been held by the Sinking Fund Commissioners for more than twenty-five years, and no interest had been paid thereon subsequently to the year 1841. By the act of March 7,1867, entitled "An act to consolidate certain bonds, stocks and accounts of the School Fund into one non-negotiable bond, and making other provisions in relation thereto," the validity of these eight bonds was recognized, and the principal and all the accrued interest thereon was included in the new non-negotiable bond given by the State to the School Fund, in pursuance of the provisions of this act. This recuced the number of these old bonds to 345. Afterwards, in 1868, eight others of these bonds were surrendered to the Agent of State, and new Five per cent. State Stocks were issued to the holders under the "Butler Bill" for one-half of the principal of the bonds so surrendered, and new Two-and-a-half per cents were issued for one-half of the interest which had accrued up to the date of the surrender, page: 7[View Page 7]Switch to Image ModeCLOSE Page 7 thereby reducing the number of these bonds outstanding to three hundred and thirty-seven.

At the time the State suspended the payment of interest on her indebtedness, in 1841, the General Government held 211 of these bonds, in trust for certain Indian tribes. The State failed to pay any interest on the bonds so held by the Government after the year 1841, but the latter at different subsequent periods applied moneys to which the State became entitled from the sales of public lands within her limits, (commonly called the Three per cent. Fund,) amounting in the aggregate to $108,208.59. This application of the Three per cent. Fund paid the interest on 141 of the bonds so held by the Government up to July 1,1949, and on the remaining 70 up to July 1,1855.

In April, 1868, one of our Senators in Congress, Hon. O. P. Morton, wrote to me that a bill had been introduced into the Senate which would be pressed to an early consideration, directing the Secretary of the Treasury to deduct from the amount that may be due to any State on account of war claims the principal and interest of all bonds issued by such State and held by the Government; that this bill was especially intended to cover the old bonds of Indiana, which were purchased by the Government for Indian annuities. Senator Morton, in the same communication, desired me to state in reply what objections, if any, I had on behalf of the State to the passage of the bill. I promptly replied that if any objections, legal or moral, could be urged to a proposition that the Government should retain out of adjusted claims which it owed to the State a sum sufficient to liquidate the principal and interest due on any bonds held by the United States against the State, I was ignorant of the existence or nature of such objections. Subsequently, in July, 1868, the Secretary of the Interior, in whose custody these bonds were held, filed two caveats with the Secretary of the Treasury, one in relation to 141 of these bonds, which had matured in 1857, requesting that payment be withheld from the State out of the balance found to be due to her for expenses incurred in the suppression of the rebellion, of such sum as would cover the face of the bonds, and such interest as might have accrued thereon; the other caveat was in relation to the remaining seventy bonds not matured, and requesting that the interest accrued thereon might be withheld in like manner. Copies of the caveats were communicated to me by the Secretary of the Treasury, and, in consequence thereof, I directed the Adjutant General of the State, who had previously been especially charged with page: 8[View Page 8]Switch to Image ModeCLOSE Page 8 the adjustment of our War claims against the Government, to proceed to Washington to obtain information as to these bonds, and also in regard to the amount of the 3 per cent. fund due to the State from the United States. The Adjutant General proceeded to the Capitol and performed the duty assigned him in a highly satisfactory manner, obtaining full information on both subjects, which was duly reported to me on his return.

Subsequently, on the 8th day of September, 1868, by my direction, the Adjutant General wrote to the Secretary of the Interior requesting that the proper steps might be taken for the settlement of the principal and interest due on these bonds, by the application of a sufficient amount of the allowed War claims of the State against the Government to that purpose. This letter remaining unanswered, I wrote myself to the assistant Secretary of the Interior on the 19th day of October, 1868, to the same effect. Copies of these letters are embodied in the Adjutant General's report herewith submitted. The result was that the Secretary of the Interior sent an agent to this city with the bonds so held by the Government, and on the fifth day of November, 1868, the 141 bonds past due, the principal thereof being $141,000, and the accrued interest thereon being $136,300, were surrendered to me with the attached coupons, and I deposited them in the vault of the Treasurer of State. The principal and interest of these 141 bonds amounted to $277,300. Of the seventy remaining bonds not matured, the Secretary of the Interior could only produce sixty-nine, one having been lost or mislaid, but he had two of the coupons of the lost bond. The coupons of these last mentioned bonds, representing interest to the amount of $46,625, were detached and surrendered to me and deposited with the Treasurer of State. The total amount of principal and interest settled was $323,925; and I requested in writing that the Secretary of the Treasury would transfer that amount out of the allowed War claims of this State against the Government to the credit of the Secretary of the Interior, in consideration of the surrender of said bonds and coupons. The Government still holds the sixty-nine bonds, the interest thereon being settled to July, 1, 1868; and the principal being not yet due. This leaves 196 of these old bonds still outstanding, 126 of them being in the hands of persons other than the Government, and one claimed by the Government being lost or mislaid.

It will remain for the General Assembly, in its wisdom, to determine what action, if any, shall be taken with reference to these old page: 9[View Page 9]Switch to Image ModeCLOSE Page 9 bonds. I would unhesitatingly recommend that provision be made for their adjustment, but for the apprehension that such action on your part might give encouragement to a combined effort which it is said will be made either at the present or at some future session of the General Assembly, to induce the State to take back the Wabash and Erie Canal, and impose upon the people of the State that half of the original debt which was extinguished, so far as the liability of the State is concerned, by the conveyance of the canal and its revenues, and some 300,000 acres of land, under the provisions of the "Butler Bill "

No such effort shall receive aid from any official action of mine, and I therefore refrain from making any recommendation as to these old Internal Improvement Bonds still outstanding.

The adjustment made under the "Butler Bill" was, as between the State and the creditors who assented to the arrangement, a complete accord and satisfaction. One half of the debt was extinguished, and ceased to be a debt against the State, and was charged exclusively, with the assent of the creditors, upon the canal and its revenues. The old evidences of debt were surrendered and cancelled, and we issued new 5 per cent. certificates for one-half of the principal, and new 2 per cents. for one-half of the accrued interest; the canal was surrendered to the creditors by conveying it to trustees, a majority of whom were selected by them, and the certificates of canal stock issued at the same time for one-half of the debt on their face show that the creditors were to look exclusively to the canal for the redemption of these certificates, and not to the State. To acknowledge any liability on the part of the State for the payment of any part of this canal debt, would be to create a new debt for a purpose expressly interdicted by the Constitution. The Constitution in terms declares that "no law shall authorize any debt to be contracted on behalf of the State, except in the following cases: to meet casual deficits in the revenue; to pay the interest on the State debt; to repel invasion, suppress insurrection, or if hostilities be threatened, to provide for the public defence,"

In 1857 the General Assembly passed a joint resolution declaring that the General Assembly has no power under the Constitution to purchase the Wabash and Erie Canal, and that if it had the power, it would be impolitic, unwise and injurious to the best interests of the people of the State to purchase said canal. I respectfully recommend that the substance of this resolution be re-adopted at the pres page: 10[View Page 10]Switch to Image ModeCLOSE Page 10 ent session. At the last session of the General Assembly, a joint resolution passed the Senate, but was not acted upon in the House, proposing an amendment to the Constitution declaring that the General Assembly shall never incur any debt or liability, or recognize any claim whatever, growing out of or connected with the Wabash and Erie Canal, or matters pertaining thereto, except as provided for in an act entitled "An act to provide for the funded debt of the State of Indiana, and for the completion of the Wabash and Erie Canal to Evansville," approved January 19, 1846, and the act supplemental thereto approved January 27, 1847; and that said acts should never be construed so as in any manner to create any liability or legal obligation on the part of the State to pay the canal debt, but that the proposed amendment should not be construed as affecting the rights of persons holding the obligations of the State, and who were not parties to the adjustment of the debt of the State as made by said acts of 1846 and 1847.

The principal of the entire debt of the State prior to the adjustment under the "Butler Bill" was over $11,000,000, and the accrued interest then unpaid was over $3,000,000. The one-half of the canal debt, including interest at five per cent., since the adjustment, would now amount to some $15,000,000. If the assumption of this immense burden is to be proposed, let the proposition be made to the people themselves, who will have to bear it by submitting a constitutional amendment upon which they can vote.

REPORT OF STATE TREASURER.

The State Treasurer's Report will be laid before you, from which it will be seen that his department is in a very satisfactory condition.

ASSESSMENT AND TAXATION.

By the first section of the act of December 21, 1858, providing for the appraisement of real estate, the Board of County Commissioners of each county were required, at the first term after the passage of the act, or at a special session to be immediately called, to appoint an appraiser of real estate for such county. A proviso to the section declares that nothing in the section shall prevent the Board of Commissioners of any county from appointing a deputy or deputies to the Appraiser in case of sickness, want of time or other disability to discharge the duties in the time and manner required by law. The sec page: 11[View Page 11]Switch to Image ModeCLOSE Page 11 ond section of the same act provides for the election of an Appraiser at the October election in 1863, and every fifth year thereafter. There is no provision in the act authorizing the Boards of Commissioners of the several counties to appoint deputies to the Appraisers that are to be elected in 1863, and every fifth year thereafter, unless the proviso to the first section confers that power. Appraisers were elected under this act at the late October election, and the Boards of Commissioners of many of the counties have already appointed deputies to the Appraisers thus elected. In answer to inquiries made by county officers, the Auditor of State has issued a circular to the several counties, in which he gives the opinion that the Boards of Commissioners have no power to appoint deputies to the Appraisers elected by the people; but that the proviso to the first section of the act only applied to the Appraisers appointed for the year 1858 by the Boards of Commissioners. I believe this opinion to be correct, and there seems to be no power conferred on the Appraiser himself to appoint deputies. As the Appraiser is required by the 13th section of the same act to return his appraisement to the County Auditor on or before the fourth Monday of May after his election, there will not be sufficient time for a single Appraiser to make the appraisement within the time limited. Some provision should be made for appointing assistant appraisers, or a law should be passed declaring that the present appraisement shall remain as the basis of taxation for another year, and giving the Appraiser elected in each county time to appraise personally all the real estate in his county. It is very important to have a uniform and just appraisement of real estate for taxation, and it is believed that this will be better attained by having one man to appraise all the real estate in a county than by having a multiplicity of Appraisers in each county.

The law as it now stands fixes the compensation of Appraisers of real estate at two dollars per day. It is worthy of consideration whether this is an adequate compensation under existing circumstances.

The act of March 15, 1867, entitled "An act to provide for the assessment and collection of taxes on shares of stock in banks, and banking associations doing business in this State,'' expressly exempts stock in the Bank of the State of Indiana and in National Banks from taxation for municipal purposes. I respectfully recommend that this section be repealed, and that an amendatory section be passed declar page: 12[View Page 12]Switch to Image ModeCLOSE Page 12 ing that shares of stock in these exempted banks shall be taxable for municipal purposes like other property.

Banks are generally, if not always, located in incorporated towns or cities, and derive as much benefit and protection from municipal government as any other persons or institutions, and there is no justice in exempting them from their just share of municipal burdens. The stock of the National Banks doing business in this State can not be taxed for municipal purposes so long as that of the Bank of the State of Indiana is exempt, became the act of Congress requires it to be placed on an equal footing as to taxation with State Banking Institutions. It is true that the fifteenth section of the charter of the Bank of the State exempts its capital stock and that of its branches from municipal taxation, and it is equally true that the Supreme Court of this State, in 1858, declared this exemption to be constitutional. In the decision alluded to it was held that the provision ot the Constitution which makes It the duty of the Legislature to "provide by law for a uniform and equal rate of assessment and taxation, and to prescribe such regulations as shall secure a just and equal valuation for taxation of all property, both real and personal." has no application to municipal taxation, but refers to the general levy by the State, and the reason given is that taxes for corporation, township and county purposes cannot be equal; that is, because a different rate of taxation is required in one municipal corporation, county or township than is demanded by the necessities of another, therefore the very just constitutional provision as to equality and uniformity of assessment and taxation of all property, has no application to county, township or municipal taxation.

The county, township and municipal taxes are many times greater than the aggregate amount of the taxes imposed directly by the State; and the result of this construction is, that the Constitution has carefully guarded the smaller interest, but has left the larger unprotected and a mere matter of legislative discretion.

In 1865, however, the decision of the Supreme Court before alluded to was virtually overruled by the same tribunal; and following the interpretation given by the Supreme Courts of Ohio and Wisconsin to similar constitutional provisions, the just principle was established that the constitutional restriction applies to every species of taxation imposed under or in pursuance of State law; not requiring that the same rate of taxation shall be imposed in one county or city that is assessed in another county or city, but that the rate of assessment page: 13[View Page 13]Switch to Image ModeCLOSE Page 13 shall be equal and uniform on all property, real and personal, within the jurisdiction or territory in which the tax is levied.

If the tax be a State tax, it must be uniform and equal on all property in all parts of the State. If it be a county, township or city tax, it must be uniform and equal on all property throughout the county, township or city in which the levy is made.

This just and reasonable interpretation of the Constitution removes all obstacles in the way of an equal taxation of bank stocks with other property. In the larger towns and cities municipal taxation is necessarily onerous, and by exempting large amounts of banking capital, (than which no other property can better afford to pay taxes,) the burdens imposed for the benefit of all, are made to fall unjustly on other property and capital not thus favored.

For the years 1867 and 1868, the tax placed upon the duplicate for State Debt Sinking Fund purposes was twenty cents on each one hundred dollars in value of taxable property, and the collections for those years were made accordingly. The correctness of this levy depends upon the construction of three separate and distinct acts of the General Assembly, and, in my judgment, a correct construction of these acts only authorized fifteen cents on each one hundred dollars in value of taxable property. The acts upon which this question depends are those of March 9th, 1861, entitled "An act in relation to applying certain funds therein named to the payment of the public debt, and raising a revenue for the support of Common Schools," etc.; the act of May 13, 1861, authorizing the issue of war loan bonds, and the State Debt bill of Dec. 21, 1865. The act first named authorizes a five cent tax for the reduction and ultimate extinction of the public debt. The act of May 13, 1861, authorizes a five cent tax for the payment of the interest and final payment of the principal of the war loan bonds, and the act last above mentioned authorizes a ten cent tax for the redemption of the five and two and a half per cent, certificates of State stock outstanding. I think the five cent tax authorized by the act of March 9, 1861, was merged in and repealed by the ten cent tax levied by the State Debt bill of Dec. 21, 1865, and left the rate of taxation at fifteen cents on each one hundred dollars in value of taxable property for State Debt Sinking Fund purposes.

I have caused estimates to be made, and am satisfied that a State Debt Sinking Fund tax of fifteen cents on the hundred dollars for the year 1869, and a tax of ten cents on the hundred dollars, for the same purpose, for the year 1870, will be sufficient, with the aid of the page: 14[View Page 14]Switch to Image ModeCLOSE Page 14 Sinking Fund assets in the hands of the Auditor of State, to pay off all the foreign indebtedness of the State with the exception of the old internal improvement bonds, and thereafter no taxes for Sinking Fund purposes will be required. I therefore recommend that these rates be established for the years above mentioned, respectively, for State Debt Sinking Fund purposes, and that the levy of twenty cents on the one hundred dollars of value, for the same purpose for the years 1867 and 1868, be legalized, to the end that there may be no question as to the collection of the unpaid taxes for those years. Unless your appropriations shall exceed what I now anticipate, the State tax proper can also be reduced to fifteen cents on each one hundred dollars of taxable property. If the Committee of Ways and Means, or any other Committee, or member of either branch of the General Assembly, shall desire to inspect the estimates upon which I base the opinion as to the rates of taxation necessary for State Debt Sinking Fund, and for general revenue purposes, it will afford me pleasure to furnish them.

WAR CLAIMS AGAINST THE UNITED STATES.

It will be seen by reference to the Adjutant General's report that, since the commencement of the war, claims against the United States have been filed, at different times, as follows, viz:

Of the above amounts, the second item of $781,652 34 had been fully settled and adjusted by Governor Morton during his administration. The third item above stated, of $23,916 68, was audited in the page: 15[View Page 15]Switch to Image ModeCLOSE Page 15 fall of 1867, and $23,859 28 allowed thereon, which last named sum was received by me December 26, 1867, and then paid into the State Treasury.

After deducting the sums thus adjusted, there still remained pending claims amounting in the aggregate to $3,568,082 30. The greater portion of the claims going to make up this amount were suspended, and some of them had been disallowed. The Adjutant General of the State did everything in his power to supply the lacking proof and explain away the objections upon which the various accounts had been suspended, and to procure a proper and final adjustment of the claims. By my direction he made several trips to Washington, and was seconded in his efforts by the personal influence and exertions of Senator Morton. I was determined, if possible, to have the claims prosecuted and adjusted without employing an agent resident at Washington, and promising or paying him a per centum, as I was informed other States were compelled to do. Ultimately, I was advised by Senator Morton, Adjutant General Terrell and others, that unless I yielded in this respect, the prospect of getting the claims adjudicated was very remote. I thereupon consented that the Adjutant General might employ such an agent, at a compensation not exceeding two per cent. on the amount which should be allowed to and realized by the State through his efforts; but that no part of this per centum should be paid until it should be acted upon and the arrangement approved by the General Assembly. The Adjutant General made a written contract with Mr. J. A. Coburn, in pursuance of this authority from me, to the effect above stated. I promised to report the arrangement to the General Assembly and recommend its approval, which I now do; but I desire it to be distinctly understood that the whole matter is open to your investigation, and must be decided by you. I have paid Mr. Coburn $1,250 to meet his expenses while engaged in this service, which sum is to be deducted out of the per centum you may allow him.

The Government held large claims against the State, upon which interest was accruing, while our unliquidated claims against the Government drew no interest, hence my great desire for a speedy adjustment of the accounts. The written agreement made with Mr. Coburn is embodied in the Adjutant General's report, to which I refer you for full information on that subject.

Since the making of this arrangement, and through the efforts of the agent so employed, allowances have been made to the State, on page: 16[View Page 16]Switch to Image ModeCLOSE Page 16 claims which had previously been suspended, disallowed, or not examined, to the amount of $1,653,497 95 ; and prior thereto, claims had been allowed amounting to $305,719 99, the aggregate of the amounts allowed being $1,958,917 94. Of this I received on the 4th day of December, 1868, the sum of $91,730 39, which I paid into the Treasury of State on the same day, and the residue of the amount so allowed, viz., $1,867,187 55, was applied as follows, viz:

And for a fuller exhibit of the condition of our war claims I refer you to a detailed statement which I have prepared and will submit with this communication as an appendix thereto.

NEW BUILDING FOR SUPREME COURT, STATE OFFICES, ETC.

By the act of March 9,1867, the Governor was authorized to cause to be erected on ground belonging to the State, a building suitable and convenient for the use of the Supreme Court and officers of State, at a cost not exceeding fifty thousand dollars.

Shortly after the adjournment of the last General Assembly, a consultation was had between the Judges of the Supreme Court, State officers and myself, with reference to the dimensions of the proposed building, and the number and arrangement of the several apartments; and the plan adopted was conformed to their wishes in these respects. Specifications were prepared, printed, and extensively circulated so as to induce competition in bidding for the contract, and sealed proposals were invited by advertisements.

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There were quite a number of bids made, and the work was awarded to the lowest bidder at a price considerably below the limit fixed by the act before alluded to. My best efforts were made to observe literally the limitation imposed as to cost, and at the same time secure such a building as the wants of the public service required, and as would not be a reproach to the State in architectural appearance.

With the greatest possible care and the most rigid economy, owing to necessary changes in the original plan, and additional accommodations which were not thought of when the specifications were prepared, I was compelled to expend $2,101 55 more than the sum named in the act, and to leave the Supreme Court room in an unfinished condition. It will require a small appropriation to finish this room, and there should be provided a stone platform with iron railing, in front of the offices on Washington and Tennessee streets.

I trust you will cause the building to be examined by the appropriate committees, feeling assured that you will find that the money was prudently expended, and that the building is well adapted to the purpose contemplated by the General Aseembly. I have prepared a detailed statement of the moneys received and disbursed in the erection of the building, which I will submit with the contracts and vouchers, and such explanations as may be necessary, to the committees to whom the subject matter may be referred.

The act authorizing the erection of the building appropriated the sum of $40,000 to be provided by a loan of that sum out of the Sinking Fund. No provision was made for the obtaining of the money necessary to carry out the intention of the act beyond the $40,000 thus appropriated.

I was fully convinced that sound economy, and the safety of the public records, required that the building should be erected with the least practicable delay; and as this could not be accomplished without the necessary pecuniary means, the whole sum expended, namely, $52,101 55, was advanced by the Auditor of State out of the Sinking Fund, and a bond was given to that fund for the sum of $40,000 (part of the sum so advanced,) in pursuance of the requirements of the act. I respectfully recommend that an appropriation be made from the State Treasury of the entire amount so advanced, and that it be repaid to the Sinking Fund without delay, and that the forty thousand dollar bond given to that fund be cancelled. There is nothing in the condition of the treasury, present or prospective, to prevent such an appropriation; and although the matter escaped my page: 18[View Page 18]Switch to Image ModeCLOSE Page 18 notice when the bill was presented for approval, and was, I suppose, also overlooked by the General Assembly in passing the bill, still it is essentially a law, authorizing a debt to be contracted on behalf of the State, and that debt is not for one of the purposes authorized by the Constitution. The Constitution declares that no law shall authorize any debt to be contracted on behalf of the State except in the following cases, viz : To meet a casual deficit in the revenue ; to pay the interest on the State debt, to repel invasion, suppress insurrection, or if hostilities be threatened, to provide for the public defense. I, therefore, trust that the debt thus inadvertently authorized contrary to an inhibition of the Constitution, will be speedily liquidated by the necessary appropriation. It may be proper to add in this connection that the building has been occupied by the State officers and Judges of the Supreme Court since January, 1868.

MORGAN RAID COMMISSION.

The General Assembly, near the close of its last session, passed a concurrent resolution after a bill somewhat similar in its nature had failed, directing the Governor to appoint three Commissioners, whose duty it should be to hear, determine, and adjust all claims for losses which had heretofore accrued by reason of the injury, destruction, loss, or impressment of property had or held by any inhabitant of this State by rebel forces under the command of John Morgan, in the year 1863, or caused by the State or national forces engaged in repelling said invasion, or caused by organized and equipped troops to repel the threatened invasion of the State by the rebel forces under Adam Johnson in the year 1864. The resolution also directed the Governor to appoint an attorney who should be present at all the meetings of the Commissioners, to act as the attorney of the State, and look after and protect her interests. Although this resolution had not the force and effect of law, it was such a positive and unmistakable expression of the will of the General Assembly that I felt it to be my duty to respect it by a cheerful compliance with its requirements. I accordingly, on the 28th day March, 1867, appointed Hon. John I. Morrison, of Marion county, Colonel John McCrea, of Monroe county, and Colonel Smith Vawter, of Jennings county, Commissioners, for the purpose indicated in the resolution. I also appointed Colonel Charles W. Chapman, of Kosciusko county, Attorney for the State under the resolution. Colonel Chapman resigned the position about the time'the Commission entered upon its labors, and I ap page: 19[View Page 19]Switch to Image ModeCLOSE Page 19 pointed General Thomas M. Brown, of Randolph county, Attorney for the State in his stead. The Commission was authorized by the resolution to appoint their own Clerk, and they did appoint William F. Browning, Esq., of Monroe county, to that position. After the Commission had entered upon its labors, it was ascertained by experience that its operations would be much delayed, and the expenses enhanced, unless additional clerical force was employed. I advised: the Commission to employ an assistant clerk, and they accordingly employed G. W. C. Self, Esq., in that capacity. The Commissioners, attorney, and clerks thus appointed, have, as I believe, all faithfully, intelligently and honestly performed their duties.

According to the requirements of the resolution, the Commissioners have made a report to me of their proceedings under the resolution, and also a supplement to that report. I herewith submit both of these reports to you for such action as you in your wisdom may deem proper to be taken thereon.

I also submit a copy of the resolution under which the Commission was organised. All the records, books, and papers, pertaining to the Commission are in my possession, and will be submitted to any committee or committees that either or both branches of the Legislature may appoint to consider the subject.

It will be seen by the reports that the sum total of all the claims presented to the Commission for adjudication was $497,899 21-100, and that the sum total of all the claims approved and allowed amounts to the sum of $413,599 48 100.

My own opinion as to the propriety of the State affording some proper relief to the sufferers by the "Morgan Raid" has long since been publicly expressed in the performance of my official duties. I have subsequently discovered no good reason to change that opinion. I adopt the language of my immediate predecessor on this subject, addressed to the General Assembly of 1865, by saying that "the true theory of our government is that it shall protect the people in their persons and property against invasion and loss from the public enemy, or injury by domestic insurrection. Where losses have been thus sustained, it is much easier for the people of the State to bear them in their collective capacity than for the particular individual on whom they have fallen."

Some of the classes of claims may be less meritorious than others, and some of the claimants may deserve less consideration than others. It will be seen that some of the claimants are corporations, and in my page: 20[View Page 20]Switch to Image ModeCLOSE Page 20 judgment an appeal from them for relief would come with much less force than one from a natural person, all of whose possessions had perhaps been swept away by the public enemy. I submit the whole matter to you, with the expression of the hope that you will give the claims of the sufferers a careful, and as far as you may deem consistent with your duty to the public, a favorable consideration. The resolution further directs that the Governor shall recommend the amount of compensation that shall be paid to the Commissioners and other officials for their services in carrying out the resolution. I accordingly recommend that the per diem and mileage allowed by law to members of the General Assembly be made the measure of compensation. No appropriation was made for record books, stationery, etc., for the use of the Commission, and the Commissioners were compelled to borrow money with which to purchase these necessaries. I submit an account of the money thus expended, and recommend that it be reimbursed. As the gentlemen appointed rendered the services by direction of the General Assembly, and while performing it defrayed their own expenses, I trust there will be no unnecessary delay in refunding the money expended, and in providing for the payment of such reasonable compensation as you may, in your judgment think proper to award. The Commissioners have embodied in their reports a statement of fees claimed by clerks, sheriffs and printers for services rendered under the resolution. It may be proper in this connection to state that the sixth clause or specification of the resolution provides that the State shall in no event be liable for the cost of witnesses summoned on behalf of the claimants, nor for the cost of summoning such witnesses. It may be that these costs were all made by the State, but it is not so stated in the report.

SOLDIERS' AND SEAMENS' HOME.

The Soldiers' and Seamens' Home near Knightstown, which was adopted as one of the Benevolent Institutions of the State by the last General Assembly, is in successful operation, and has already accomplished great good in ministering to the necessities of a class of men who have done and suffered much for their country. The report of the Board of Trustees of that institution is herewith respectfully submitted, to which you are referred for a full history of its operations. The fifty acre tract of land on which the Home is situated was purchased prior to the adoption of the institution by the page: 21[View Page 21]Switch to Image ModeCLOSE Page 21 Legislature, with the voluntary contributions of the people. Since the adjournment of the last General Assembly the land has been conveyed to the Board of Trustees, created by the act of last session. It will be seen by the report of the Superintendent accompanying that of the Board of Trustees, that, since the establishment of the Institution, four hundred men, disabled either in the military or naval service of the country, have received the benefits of the Home ; that two hundred and twenty-one of that number, after a temporary sojourn at the Home, were discharged in an improved condition; that thirty-one have died, and that one hundred and forty-eight still remain in the Institution. The Board of Trustees have erected a beautiful brick edifice, capable of accommodating about two hundred men, and have devoted the old frame buildings, which were on the farm at the time of its purchase, to the use of the Orphans' Department, in which are gathered eighty-six children of deceased soldiers. Many of these children were taken from the Poor Houses of the different counties; and all of them would have suffered for food, raiment and mental and moral culture, but for the guardian care which the State exercised over them in providing this institution.

I feel assured that no effort on my part is necessary to secure from you ample provision for these disabled soldiers and orphan children.

BENEVOLENT INSTITUTIONS.

Common humanity, as well as the requirements of the Constitution, demand that the Institutions for the Education of the Blind, and the Deaf and Dumb, and the Hospital for the Insane, should be liberally supported.

When the new wing of the Hospital for the Insane, now nearly completed, shall have been finished and prepared for the reception of inmates, the capacity of the institution will be nearly, if not quite doubled, and many in all parts of the State, who are now suffering for want of proper care and treatment, may be relieved. The Board of Trustees represent in their report that the provision made for the subsistence of the inmates is not adequate to their wants. Believing that upon a careful examination of their report and accompanying tables, you will be satisfied that their request for increased liberality on the part of the General Assembly is entirely reasonable, I feel assured that you will not hesitate to make such increased provision as the wants of the institution may justly require.

The Board of Trustees of the Institution for the education of the page: 22[View Page 22]Switch to Image ModeCLOSE Page 22 Deaf and Dumb, as well as that for the education of the Blind, ask appropriations for the enlargement of their respective Institutions. At the time of the establishment of these Institutions, the State contained a much smaller population than it now does; and we must not forget that the number of those who need the training which such institutions can alone impart, will increase with our population, and we should be prepared with additional accommodations commensurate with the number which may from time to time be entitled to admission. For a statement of the condition and wants of these benevolent institutions, I refer you to the reports of their respective Boards of Trustees, and recommend that every reasonable demand made by those under whose care they are placed may be promptly and liberally supplied.

HOUSE OF REFUSE.

At the last session of the General Assembly a successful effort was made for the first time to execute the mandate of the Constitution requiring the law making power to provide Houses of Refuge ; for the correction and reformation of juvenile offenders.

The third section of the act then passed made it my duty to select and establish a site for the Institution, and authorized the procurement for that purpose, by donation or purchase, in the name of the State, of not less than eighty nor more than three hundred and twenty acres of land, giving preference, other things being equal, to a location central and easy of access from all parts of the State.

Shortly after the adjournment of the Legislature, persons interested in the matter, were invited by public advertisement, to make propositions for the donation or sale of lands which they might judge to be suitable for the site of such an Institution. Numerous propositions to sell lands to the State were received, but no donations were offered. I examined either personally or through a competent agent about thirty farms at different points, with a view to the selection of the best site for the Institution, and ultimately purchased two adjacent tracts of land in Hendricks county, near the town of Plainfield, for that purpose. The two tracts contain, together, two hundred and twenty-one acres. The purchase was made in June, 1867, and in the same month I deposited in the office of the Secretary of State a certificate of the location of the institution, together with the deeds of conveyance by which the lands were conveyed to the State. One of the tracts, consisting of one hundred and sixty acres, of upland, page: 23[View Page 23]Switch to Image ModeCLOSE Page 23 was purchased from Robert R. Downard for twelve thousand eight hundred dollars ($12,800). The other, consisting of sixty one acres and a fraction of superior creek bottom land, was purchased from John Larrance for the sum of eight thousand five hundred dollars ($8,500), making the entire cost $21,300.

By the 25th section of the act to establish the institution, the sum of fifty thousand dollars was appropriated, to be paid out of the State Treasury to the Board of Control of the institution in such sums and at such times as might be deemed necessary and proper. By the 26th section of the act, the Governor and Board of Control of the institution were authorized to sell a tract of land owned by the State, and described in that section, containing one hundred acres, for cash or on credit, and apply the proceeds thereof towards the purchase of other grounds and the erection of suitable buildings for the institution. From what has already been said it will be seen that it was made my duty to locate the Institution, and to procure the necessary land by purchase or donation, but no means were placed at my control except such as might arise from the sale of the one hundred acres of land belonging to the State, and authorized to be sold as before stated. As it was manifest that with the most prudent management and the most rigid ecoonmy, the $50,000 appropriated would not be sufficient to erect the necessary buildings, furnish them and defray the current expenses of the Institution until the meeting of the present General Assembly, I borrowed, temporarily, from the Board of Control $12,000, to enable me to make the advance payment on the land. Of this $12,000, I paid to Mr. Downard $7,000, in part payment of the land purchased from him, and agreed that the State would pay him the balance of the purchase money, viz., $5,800, (with interest from the date of the purchase,) on or before February 20, 1869; and for the security of the payment of this amount a lien was reserved in the deed from Downard to the State. The residue of the $12,000 thus borrowed from the Board of Control, viz., $5,000, I paid to Mr. Larrance in payment of the cash portion of the price of the land purchased from him, and I agreed that the State would pay him the remainder of the purchase money, viz., $3,500, (with interest from the date of the purchase,) on or before the 20th day of February, 1869.

Diligent efforts were made to sell the hundred acre tract of land before mentioned, but only two offers were made therefor. One of these offers was so much below the real value of the land that it could page: 24[View Page 24]Switch to Image ModeCLOSE Page 24 not be entertained. The other offer of $7,500 was believed to be the fair value of the land. It was made by Mr. William McCaslin, of Marion county, but he did not propose to pay any part of the price in cash. His proposition was to pay one-third of the purchase money, with interest, on the 15th of October, 1867; another third, with interest, on the 27th day of May, 1868, and the remaining third, with interest, on the 27th day of May, 1869, and to secure the whole by a mortgage on other lands, with a stipulation in the note and mortgage that a failure to pay any instalment when due should render the whole due and payable. With the concurrence of the Board of Control of the House of Refuge, I accepted Mr. McCaslin's proposition, gave him a certificate of purchase, showing that he would be entitled to a deed from the State upon full payment of the purchase money. The first and second instalments of the purchase money having become due, and not having been paid, proceedings were commenced and are now pending for the foreclosure of the mortgage.

Prior to the location of the House of Refuge, a portion of the people of Plainfield and its vicinity proposed to raise by subscription a considerable sum of money to be donated to the State to aid in paying for the land to be purchased for the site, provided the Institution should be established in that neighborhood. These subscriptions amounted in the aggregate to $7,379, and were payable in three equal annual instalments on the 25th of December, 1867, 1868, and 1869, respectively. Of the amount so subscribed, notes were taken from a portion of the subscribers, payable in instalments as before stated, to the amount of $5,595, and the residue still stands on the original subscriptions except so far as subsequently reduced by payments. On the subscriptions and notes thus taken, there has been collected and paid into the State Treasury the sum of $1,293 88. The further sum of $491 95 has been satisfied by work and materials and live stock furnished by subscribers for the House of Refuge and the farm, making the total sum collected on notes and subscriptions $1.785 83. It is believed that when all is collected that can be collected, the State will, with the collections already made, realize from these notes and subscriptions at least $6,000. If this estimate shall prove to be correct, and the price of the one hundred acre tract of land sold, as before mentioned, shall also be collected, as it assuredly will, the two hundred and twenty-one acres on which the House of Refuge is located will only have cost the State $7,800, over and above the proceeds of the sale of the one hundred acre tract. In the month of October page: 25[View Page 25]Switch to Image ModeCLOSE Page 25 last, I repaid to the Board of Control the $12,000 so borrowed from them ; and to do so I was compelled to borrow that amount in another quarter. I respectfully ask that an appropriation be immediately made to enable me to refund the money thus borrowed ; and also an appropriation sufficient to pay the balance of the purchase money, with interest, due to Downard and Larrance respectively.

It affords me pleasure to say that the success of the House of Refuge has exceeded my most sanguine expectations. I respectfully refer you to the report of the Board of Control for a history of its operations, and commend the institution to your fostering care, with the expression of a confident belief that, in liberally providing for its enlargement and support, you will be practicing a wise economy and meeting the expectations of an enlightened constituency.

I am fully persuaded that, in the execution of our penal laws too little attention has been given to the reformation of offenders ; and the juvenile delinquents of a community afford not only a hope, but, in a large majority of cases, an assurance of success in the exercise of reformatory influences and treatment. It will be seen by the report of the Board of Control, that of the $50,000 appropriated for the establishment of the institution, and for defraying the current expenses thereof, the sum of $39,261 25 was expended in buildings and other necessary improvements ; that the expenses of the institution since it was opened, in January, 1868, including furniture, stock and implements for the farm, and the clothing and support of the boys, &c., &c., amount to the sum of $20,738 75 ; and that the Commissioners were compelled, to enable them to keep the institution in operation, to make a loan of $10,000.

I am fully satisfied that the affairs of the Institution have been wisely and economically managed, and that the loan was unavoidable; and it is due to the Commissioners to say that it was made with my approval, and that I personally bound myself jointly with the Commissioners in an obligation to repay the same. I recommend that an appropriation be made without delay to enable the Commissioners to repay the sum so borrowed.

BANK OF THE STATE OF INDIANA.

I herewith submit the Report of the Board of Directors of the Bank of the State of Indiana, and of each branch thereof made in pursuance of the sixtieth section of the charter of that institution:

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QUARTERMASTER GENERAL'S REPORT.

At the last session of the General Assembly Governor Morton submitted, as one of the documents accompanying his message, the final report of Quartermaster General Stone. The report gives an account of the disbursement of hundreds of thousands of dollars, besides other important matters relative to the part taken by this State in the suppression of the rebellion. The report was not published with the other reports accompanying that message, whether intentionally or by mistake I do not know.

Believing that the report ought to be published, I have thought it best to call your attention to the matter. The report is in my possession, and will be furnished should you see proper to order its publication.

I herewith respectfully submit the report of the present Quartermaster General, to which you are referred for information in regard to his Department.

STATE PAYMASTER.

By the twenty third section of the General Appropriation bill of March 11, 1867, Major Stearns Fisher, State Paymaster, was directed to pay over to the State Treasurer, on the 15th day of June of the same year, any balance of money in his hands belonging to the State, and to deposit in the office of the Adjutant General all books, papers and property in his possession belonging to the State or connected with the pay department. This direction was strictly complied with by Major Fisher at the time designated, and a copy of his report to the State Treasurer for final settlement of his accounts as Paymaster of the Indiana Legion was communicated to me. Supposing that this report should, as an item in the financial and military history of the State, be printed either in the Documentary Journal, or in some other form, the same is herewith respectfully submitted.

STATE PRISONS.

The reports of the Boards of Directors of both the State Prisons show that the finances of these institutions are in a satisfactory condition, and that there has been a great improvement in this respect within the last two years.

The subject of prisons and prison dicipline is one of great importance, and is attracting increased attention throughout the country. page: 27[View Page 27]Switch to Image ModeCLOSE Page 27 It will not be many years before the State will require additional prison accommodations, and in anticipation of that event I desire to call attention to the propriety and necessity of providing a system of graded prisons. The man who is convicted of the first offense of which he has been guilty, especially if he be a young man, ought not to be confined with and put under the influence and tuition of professional criminals whose entire lives have been hardened by crime.

There should, when increased prison accommodations are required, be established an intermediate prison, between the House of Refuge and the present State Prisons, to which the more youthful and less hardened offenders should be sent, and where reformatory influences would be exerted over the prisoners to a much greater extent than is possible in our existing penitentiaries. Under such a system, and with power lodged somewhere to transfer incorrigible prisoners from the intermediate prison to the penitentiaries, and with authority also to transfer prisoners who, by their good conduct for a series of years, give evidence of reformation, from the penitentiary to the intermediate prison, we might hope more effectually to comply with that provision of the bill of rights which declares that the penal code shall be founded on the principles of reformation and not of vindictive justice. There is, however, a present and pressing necessity for a separate prison for female convicts. There are now some nineteen or twenty women incarcerated in the Southern Prison, to the great detriment of sound morality as well as the good government of the institution. Moral, sanitary and disciplinary considerations concur in demanding that these women, as speedily as possible, should be removed to a prison to be provided exclusively for their sex, and to be under the government of women. Their labor is, under existing circumstances, of no value to the State, and the cells now occupied by them will soon be required for male convicts. Another want equally pressing, is that of a Reformatory institution for girls. It is impossible to receive girls in the House of Refuge at Plainfield without destroying its reformatory character, and converting it into a juvenile prison, I therefore urgently recommend that a separate prison for female convicts be established with the least practicable delay, and that there be connected with it on the same grounds and under the same direction and management, but in different buildings, a reformatory for girls. The number of female convicts, as compared with the other sex, is not large, so that an Institution of very moderate capacity would meet the necessities of the case, and the expense which would page: 28[View Page 28]Switch to Image ModeCLOSE Page 28 be occasioned by providing such an Institution would be abundantly compensated by the good which would be accomplished as well as by the evil that would be avoided. I have no sympathy with those who think that crime when committed by woman ought not to be punished; bu only insist that the punishment should be adapted to the condition of the offender, and that the laws of common morality and decency ought not to be ignored in its infliction. The fact that it is so difficult to convict women of penitentiary offences, shows that the public sense of justice and propriety revolts at the idea of sending them to the State Prisons, and I know of only one other worse place to which a woman could be sent and that is to the County jail in any of the larger towns or cities of the State. I commend the subject to your careful consideration, with the expression of the hope that the result of your deliberations will show that the cause of these unfortunate women has not been presented in vain.

CRIMINAL LAW AND PRACTICE.

The barbarous and brutalizing practice of prize-fighting is becoming lamentably prevalent in this country, and our own State has not been entirely free from such disgraceful and demoralizing exhibitions.

Our penal code contains no adequate provisions, either preventive or punitive applicable to such cases. I therefore recommend that both of these omissions be supplied by proper legislation, providing upon proper affidavit for the arrest and holding to bail of those intending and preparing to engage in such contests; also, by making it a felony on the part of the principals and seconds who may engage in a prize fight, and a high misdemeanor on the part of those who, by their presence, may encourage the commission of the offence.

The 35th section of the act of June 10, 1852, entitled "An act defining felonies and prescribing punishment therefor," should be amended. That section makes it forgery on the part of any justice of the peace to issue blank affidavits or certificates of acknowledgment signed by him with the intent that such blanks shall afterwards be filled up and used as affidavits or certificates of acknowledgment. It would be difficult to assign a good reason why this statute should be confined to justices of the peace, or why it should not extend to notaries and all other officers empowered to administer oaths or take and certify acknowledgments.

The section should also be enlarged so as to embrace within its scope other fraudulent acts of a similar character, not now provided page: 29[View Page 29]Switch to Image ModeCLOSE Page 29 for, viz: Issuing affidavits filled up and certified as having been sworn to, when, in point of fact, the person named in the affidavit as the affiant, never was sworn at all; also, issuing affidavits purporting to be subscribed and sworn to by persons therein named, when the pretended affiants are fictitious persons. It is said that frauds of the character just indicated, have been committed in issuing affidavits under the Registry Law of 1867. Whether this is true or not, it is manifest that they are as likely to occur as those guarded against by the section mentioned in its present shape.

The reputation of the State has been seriously injured since the last session of the General Assembly, in repeated instances, by the execution of prisoners, accused of crime, by mob violence. Within the time mentioned more than a dozen of persons have thus suffered death at the hands of organized bands of men, not acting under the impulse of momentary passion, occasioned by some outrage just discovered, but proceeding with a deliberate determination that evinced a purpose to permit no law, human or divine, to stand in the way of the accomplishment of their object. In all these cases the persons executed were taken by violence from the custody of the officers of the law by whom they were held for trial for offences with which they were charged. The pretext set up as an excuse for resorting to such violence is that the law is powerless to punish offences in certain districts, and that the officers of the law have proved to be unfaithful in the performance of their duties; and yet the men who assume to sit in judgment upon the law and its officers, and who enforce their own uncontrolled and irresponsible will as something above and superior to the laws of the State, do not hesitate to shoot down a sworn officer of the law, engaged in the faithful performance of his duty, when such a murderous proceeding is necessary to the furtherance of their designs, or to prevent their discovery and prosecution.

Whenever I have been apprised by the local authorities of anticipated danger of this character, I have uniformly furnished arms to the officers having the custody of prisoners, to the end that they might be securely guarded until tried by the proper Court. The recent out rage at New Albany owed its success to the audacity of its perpetrators, and was not anticipated by the local authorities, or people of that city. Some time before these prisoners were confined in the prison in that city, and in anticipation of their delivery there for safe custody, I sent an agent to that place to ascertain and report as to their probable safety if they should be there delivered and imprisoned to page: 30[View Page 30]Switch to Image ModeCLOSE Page 30 await their trial. The result of the inquiries made assured me that no danger of violence was to be apprehended if they were delivered and imprisoned for trial at New Albany, and I so informed the Secretary of State of the United States, who had telegraphed me on the subject.

I respectfully submit to you whether suitable pecuniary rewards ought not to be authorized to be offered and paid for the discovery and arrest of those who were engaged in the perpetration of the recent terrible tragedy, and for the detection and arrest of all who may hereafter be engaged in similar acts.

It should also, in my judgment, be made a felony to join or be a member of any organization or association which has for its object the usurpation of the functions of the judiciary by condemning and punishing others for real or pretended offences. It is also worthy of consideration whether some legislation is not called for providing for the custody and safe keeping of prisoners accused of crime at points in the State distant from the scene of the commission of the alleged offences, where it is made to appear that there is reasonable grounds to apprehend mob violence, if confined for trial at or near the place where the offence is charged to have been committed.

I have long been satisfied that it would be wise to allow courts and juries a larger degree of discretion than they now possess in assessing the punishment, on a conviction, in a certain class, or perhaps classes of felonies. Especially is this true of the crime of larceny. The punishment for grand larceny can not, in the case of a male adult, be less than two years' confinement in the State prison. This, in some cases is an excessive punishment. In petit larceny the punishment may be as low as one year in the penitentiary, or for any determinate period in the county jail. The distinction between grand and petit larceny is purely arbitrary, depending on the value of the property taken. If the value is five dollars, or upwards, the offence is grand larceny ; if under five dollars it is petit larceny. The moral turpitude involved in a given case of grand larceny may be less than that pertaining to another of petit larceny; and yet the arbitrary distinction of value compels a sentence, upon conviction of grand larceny, for at least two years in the penitentiary, while as to petit larceny there is allowed the largest discretion. Such a discretion also exists in the punishment of the crime of perjury; and it is believed that no good reason can be assigned for denying it as to the offence of grand larceny, if, indeed, the distinction between grand and petit page: 31[View Page 31]Switch to Image ModeCLOSE Page 31 larceny should exist. I respectfully recommend that the distinction between grand and petit larceny be abolished, and that courts and juries be allowed a large discretion in assessing the punishment on conviction of larceny. Or if it is not thought best to do this, reduce the minimum punishment for grand larceny from two years to one year.

By our Constitution, white male persons of foreign birth, of the age of twenty one years and upwards, who have resided in the United States one year, and six months in this State prior to an election, are electors, provided they have declared their intention to become citizens of the United States conformably to the laws of the United States on the subject of naturalization. By the acts of Congress this declaration may be made before the Clerk of any Court of Record of any State, such court having common law jurisdiction, and a seal and clerk or prothonotary. It has been represented to me that in some instances Clerks of Circuit Courts in this State have issued blank certificates of declarations of intention to become citizens, under the seal of the court, without, however, signing their names thereto, and then have entrusted these blanks to partisan friends, who were duly appointed deputy clerks, and these deputies, on the day of election appeared in the different townships and issued the certificates to such foreigners, of the proper political affiliations, as might appear before the deputy and take the oath of intention. I recommend that this public indecency be prohibited by proper penalties ; and that it shall be made unlawful for any Clerk, either personally or by deputy, to take the declaration of any foreigner to become a citizen, or to issue a certificate thereof at any other place than the Clerk's office, or the Court House, when the Court is in session.

Our Bill of Rights requires that justice shall be administered speedily and without delay, and the public, as well as persons accused of crime, have a right to insist on the enforcement of this requirement. There is a growing conviction, however, not only with the mass of the people, but among many of our best lawyers and judges, that there are serious omissions and defects in our legislation in respect to the practice of the Courts in criminal prosecutions. The facility with which continuances and changes of venue can be obtained on false affidavits, with a view to delay merely, until the evidence relied upon by the State is no longer attainable, is begetting a distrust in the administration of the penal laws, and is made an excuse for a resort to summary punishment by mob violence, disgraceful to the State, page: 32[View Page 32]Switch to Image ModeCLOSE Page 32 and which, if tolerated, must ultimately become subversive of all law.

As the law now stands, as long as a defendant in a criminal prosecution will continue to make affidavits technically sufficient, however untruthful, the Court, although satisfied that no real grounds of delay exist, must grant the application or run the risk of a reversal of the case on appeal, upon the ground that the application was improperly refused. Under such a practice, the skill of the lawyer in preparing the affidavit, and not the truthfulness of the statements of the affiant, becomes the ground of judicial action.

I respectfully recommend that it be provided by proper legislation that whenever application is made for a continuance in a criminal case, founded on affidavit, setting forth as the basis of the application the absence of witnesses whose testimony is material to the defense, that the Court may of its own motion, or at the instance of the Prosecutor, to test the merits of the application, require the accused to submit to an oral cross examination in open Court as to the matters set forth in the affidavit as the grounds of the continuance; and also providing that if the accused declines to submit to such cross-examination, the Court shall refuse the application. I would also provide that the Court may, in its discretion receive counter affidavits or oral testimony tending to disprove the statements relied on as the grounds of continuance, and that no judgement of conviction shall be reversed because of a refusal to grant a continuance, unless the refusal, upon all the evidence adduced upon the question shall manifest a palpable abuse of discretion on the part of the lower Court. Also, that, when an affidavit is filed for a continuance on the ground of the absence of a witness, if the prosecutor will admit that the witness would, if present, swear to the material and relevant matters stated in the affidavit, then such matters may be read as evidence from the affidavit on the trial, but the cause shall not be continued because of the absence of such witness I further recommend that in such cases, it shall be made competent for the State to prove the bad reputation of the witness named in the affidavit just as if he had been personally examined as a witness on the trial.

I further recommend that provision be made by law that where an Application is made for a change of venue on account of any objections the accused may make to, the Judge of the Court, that some other Judge, or any disinterested attorney of the Court may be substituted to preside at the trial, to the end that no continuance of the cause may be occasioned by the granting of the application. The rule of prac page: 33[View Page 33]Switch to Image ModeCLOSE Page 33 tice introduced into the Code of 1852, which gives the defendant's counsel the right to make the concluding argument to the jury, is an innovation upon the well established principle that the party upon whom the burden of proof rests should be permitted to open and close the discussion. The practical operation of the rule is not believed to be conducive to the ends of justice. When it is considered that our Prosecuting and District Attorneys are so inadequately compensated, and are therefore not generally men of the largest experience, and that the defendant if he be possessed of means can always secure in his defense the best talents and ripest experience of the profession, it seems to be clear that the State should not be placed under disadvantages in relation to the conduct of the argument of causes which are not imposed upon other litigants. I therefore recommend that the rule of practice above alluded to be abrogated, and that the practice as it stood prior to the adoption of the Code of 1852 be restored.

COURTS.

The organization and jurisdiction of the Courts is a subject which should receive your careful consideration. In the larger counties, the criminal prosecutions occupy so much of the time of the courts that it almost amounts to a denial of justice to litigants in civil cases. This was to some extent relieved in the four most populous counties of the State, by the establishment of a Criminal Circuit Court in each of those counties. Even with this relief, however, in Marion county, the civil dockets of the courts are so crowded with business that the delay necessarily occasioned in the trial of causes is very injurious to public and private interests. Under the legislation for the establishment of Criminal Circuit Courts, such courts can only exist in counties having at least seven thousand voters. There are counties in this State, not having this number of voters, in which there is a pressing necessity that the Circuit Courts should be relieved of Criminal cases, in order to enable them to transact the civil business. It has been a question with the legal profession whether the Criminal Circuit Courts now existing, are Circuit Courts such as the Constitution requires to be established in each county, or inferior Courts, such as the Legislature may in its discretion provide; or whether they have a constitutional existence at all. The Supreme Court has sanctioned the legality of their existence without deciding to which class they belong. Motives of public policy so strongly pointed to the necessity of sustaining the legal existence of these courts that it may be that the Supreme Court page: 34[View Page 34]Switch to Image ModeCLOSE Page 34 trusted that the General Assembly would disembarrass the subject by future legislation. In my opinion, a judicial circuit is, under the Constitution, as much a territorial subdivision of the State as is a county; and that it is as impossible, constitutionally, to have one Judicial Circuit within the boundaries of another as it would be to organize one county within another.

If this be so, the Criminal Circuit Courts are not Circuit Courts within the meaning of those terms as employed in the Constitution, but can only be sustained as belonging to the class of inferior courts which the Legislature may establish at its discretion. But if these courts are inferior, and not Circuit Courts, the terms of the judges can not, according to the Constitution, exceed four years. The law, however, establishing the Criminal Circuit Courts does not prescribe the terms of the judges thereof, but assumes that they are Circuit Judges, and therefore entitled to hold for the constitutional term of four years. A matter of so much importance ought not to depend upon legislation as to the constitutionality of which there is any doubt. I therefore recommend that the law be so changed as to make these courts inferior courts for the counties for which they are provided, and prescribing four years as the official term of the judges; and providing for their establishment in other counties where the population and business require that the Circuit Courts should be relieved of their criminal jurisdiction. The time will soon come, if it has not already arrived, when the public interest will demand a remodeling of our judicial system. The wisdom of having two courts in each county, whose jurisdiction is so nearly concurrent as is that of the Circuit Court and the Court of Common Pleas, and whose terms it is so difficult to arrange without a conflict, and without inconvenience to the bar, is more than doubtful. If we desire to increase the efficiency of our judiciary, we must have fewer Courts possessing so nearly the same jurisdiction; and must better remunerate our judges. With Courts of exclusive criminal jurisdiction in our more populous counties, a diminution of the size of our judicial circuits, and a corresponding increase of their number, and an increase in the terms of the circuit courts : and with a proper division of the probate business between the clerks in vacation and the Circuit Courts, and the Court of Common Pleas, the State could afford to pay the Circuit Judges a more adequate compensation.

The increased and increasing amount of business in the Supreme Court, suggests the necessity of some legislation that will relieve that page: 35[View Page 35]Switch to Image ModeCLOSE Page 35 tribunal of a portion of the cases that will soon crowd its docket, and discourage all efforts to dispose of appeals within a reasonable time after their submission.

As the jurisdiction of that Court is now regulated by law, either party to an action may appeal from any final judgment of the Circuit or Commmon Pleas Courts, except in actions originating before a Justice of the Peace or Mayor of a city, where the amount in controversy, exclusive of interest and costs, does not exceed ten dollars. In my opinion the time of the Supreme Court ought not to be occupied in trying cases where the amount involed can not, in the event of the success of the appellant, justify the expense of the litigation. I therefore recommend that the appellate jurisdiction of the Supreme Court be limited to cases where the amount in controversy is one hundred dollars or upwards.

I also commend to your serious consideration the propriety of increasing the compensation allowed to the Judges of that Court. It is not creditable to the State that our highest judicial officers should receive less for their services than is allowed to many county officers whose duties are purely administrative or ministerial, and for the performance of which no previous professional training is necessary. A cheap judiciary will in the long run prove to be more expensive to the public than one that is adequately paid.

AGRICULTURE.

The report of the State Board of Agriculture for the years 1867 and 1868, will be laid before you. It is believed that this board is doing much to promote the agricultural interests of the State, upon which all other interests so largely depend. At present there is no means of collecting and disseminating statistical information as to the agricultural, manufacturing and mechanical products of the State. If we desire to compete with other States in attracting capital and inviting immigration, some means must be used to make known what we have already accomplished and the vast resources of our State which still remain to be developed. A statistical department might be connected with the State Board of Agriculture or with the office of the Secretary of State, and it is believed that the small outlay which this would occasion would soon be repaid by the increase of population and capital which would ensue. Our large coal and iron interests are almost unknown beyond the borders of the State, and even our own people have no adequate idea of the extent of these interests. page: 36[View Page 36]Switch to Image ModeCLOSE Page 36 No State has greater opportunities and capabilities than our own for multiplying and diversifying her industrial productions. If we shall do our duty in advertising our resources so as to attract manufacturing capital to our borders we will soon have a home market for our agricultural productions, instead of being compelled to pay high rates of transportation to carry them to distant markets. As a means to this end, a thorough and scientific geological survey of the State would seem to be a necessity. Such a survey has been repeatedly recommended by my predecessors, and I now repeat the recommendation, feeling assured that parsimony in this respect is the very reverse of true economy. It is also believed that a small annual expenditure, for the purpose of attracting immigration to the State, if judiciously disbursed, would soon be repaid by the increase of taxable persons and property which would result therefrom. By the act of March 5, 1859, the Governor was directed to select a convenient room in the Capitol, or in any other building that may be erected by the State, if a suitable One can be found, and if not, to hire one suitable for the deposit and safe-keeping of such minerals, soils, ores, fossils, maps, sketches, &c., as may be collected or made by the State Board of Agriculture, which room shall be placed under the control of said Board. At the Commencement of the War, the room which had been assigned to the Board under this act, was taken for military purposes, and the geological cabinet of the Board was deposited in the cellar of the State House, and their cases in which specimens, &c., were kept, were taken for other purposes. In Januaey, 1868, after the old Supreme Court room was vacated, I assigned that room to the State Board of Agriculture, and the Board requested me to have the room fitted up and suitable cases supplied for their cabinet. I replied that there was no appropriation at my disposal which could be properly applied to that purpose, and requested the Board to procure the necessary cases, furniture and fixtures upon the assurance that I would recommend to the General Assembly that an appropriation be made to cover the necessary expenses thus incurred. The Board will inform the Financial Committees of the amount thus expended, and I trust that an appropriation will be made to reimburse the amount thus expended.

EDUCATION.

The common school system of the State is gradually but steadily improving and becoming more thorough and efficient in the great Work of educating our children and youth. The increased and in page: 37[View Page 37]Switch to Image ModeCLOSE Page 37 creasing pride which the educators of the State manifest in the noble profession to which they have devoted themselves is worthy of the highest commendation. Indeed, I know of no class of our people who devote so much time and means to the elevation of their profession as the one to which allusion has just been made. If these efforts shall be properly appreciated and encouraged, the time will come when the education of the young will not be entrusted to those who resort to teaching as a temporary expedient to enable them to prepare for the duties of some other vocation more congenial to their tastes ; but our schools will be presided over by trained teachers who love the profession of their choice, and who are anxious to excel in the performance of its duties.

It is much to be desired that the time during which the schools are in operation in the rural districts should be prolonged, but it may well be doubted whether it would be wise at this time to resort to an increase of the State tax for school purposes to accomplish that object.

By the act of March 9th, 1867, it is provided that the Trustees of Civil Townships, the Trustees of incorporated Towns and the Common Councils of Cities, may levy annually a tax not exceeding twenty-five cents on each one hundred dollars of taxable property, and twenty-five cents on each poll, to be expended within the jurisdiction assessing the same, in the same manner as funds arising from taxation for common school purposes are required to be expended. As a similar enactment had, in 1854, been declared unconstitutional by the Supreme Court, it was reasonable to suppose that the constitutionality of the act of 1867 would be tested in the judicial tribunals of the State. Such, however, as far as I am informed has not been the result, but, on the contrary, in every locality where the tax has been levied the people seem to have acquiesced in the law under which it was imposed as a constitutional exercise of the taxing power. If this acquiescence shall continue, or if in the event of the constitutionality of the law being questioned, the Courts shall sustain it, the interests of common school education will probably be better subserved by the aid thus given than by an increase of the State tax for school purposes.

When the people of a township, or of an incorporated town or city are taxed for the support of the schools of their own immediate vicinity, it is believed that they will take a deeper interest in their page: 38[View Page 38]Switch to Image ModeCLOSE Page 38 improvement and efficiency than under a system which teaches them to look entirely to the State for the means of education.

The act of 1867 is, however, defective in this, it makes no provision for any return either to the Superintendent of Public Instruction or to the Auditor of State, showing the extent to which this power of local taxation may be invoked by the townships and incorporated towns and cities of the State. So far as the civil townships are concerned, if a school tax is assessed under this act, the amount assessed in each will be included in the aggregate of the taxes of the township returned through the County Auditor to the Auditor of State, but there will be nothing to show whether any portion of that aggregate consisted of taxes levied to support schools in the township or not.

As to incorporated towns and cities, no return whatever is provided for. I therefore recommend that provision be made that every township, town or city which may exercise the power of taxation conferred by the act, shall make a return through the Auditor of the county either to the Auditor of State or to the Superintendent of Public Instruction, of the amount so levied and the date of the levy. Provision should also be made by which the Superintendent may be properly informed of the practical results of the tax in every jurisdiction in which it may be levied in prolonging the term of instruction therein.

In the cities and larger towns of the State the office of School Trustee has become one of great and increasing importance, as well on account of the pecuniary as the educational interests involved. By the 5th section of the School Law of March 6th, 1865, it is enacted that the Common Council of each incorporated city, and the Board of Trustees of each incorporated town of this State, shall, at the first regular meeting in the month of April of each year, and biennially thereafter, elect three School Trustees.

It would be a much better arrangement if the section was so amended as to require the election to take place at the first meeting (or as soon thereafter as practicable) of the new Council or Board which may be elected at the respective town and city elections in the spring of each year.

A large majority of the towns and cities of the State are now incorporated under the general laws in force on those subjects, and under these laws the town and city elections occur in the month of May, so that the retiring Councils or Boards instead of those newly elected page: 39[View Page 39]Switch to Image ModeCLOSE Page 39 appoint the School Trustees. A few towns and cities still exercise their corporate powers under special charters, passed before the adoption of the present Constitution, and the days on which their elections occur are not uniform, but all of them are believed to be in April or May. By the amendment proposed, the law would operate alike as to all towns and cities, no matter under what law incorporated, by giving to the newly elected Council or Board of Trustees the appointment of the School Trustees for the current year. The section should in my opinion be further amended so as to provide that at the first election of School Trustees which shall take place after the adoption of the amendment, one shall be chosen for one, another for two, and the third for three years; and that annually thereafter, one Trustee shall be elected, to the end that a degree of experience in the educational affairs of the town or city may be always secured commensurate with the important interests entrusted to the Board of School Trustees.

I herewith respectfully submit the biennial report of the Board of Trustees of the State Normal School. From an inspection of this report it will be seen that a large appropriation will be required to complete and furnish the edifice now in course of construction. It is believed, however, that the benefits which will accrue to the cause of education from the establishment of the Institution will ultimately vindicate the wisdom of the appropriations large as they may appear.

In October last, the late efficient Superintendent of Public Instruction, Professor George W. Hoss, to whose zeal and fidelity the educational interests of the State are so largely indebted, resigned his office, to take effect on the 17th of that month; and a few days thereafter, I appointed the present incumbent, Professor Barnabas C. Hobbs, whose report will be laid before you, and to which I respectfully refer you for information in detail containing the various matters appropriate to his department of the public service.

EDUCATION OF COLORED CHILDREN.

It is time that the illiberal policy heretofore pursued toward the colored people of the State in reference to the education of their children should be abandoned. It will be seen by the report of the Superintendent of Public Instruction that, by correspondence with the officials of other States, he has collected information which will enable you to institute a comparison between our legislation and that of our sister States on this subject. This comparison will show that, page: 40[View Page 40]Switch to Image ModeCLOSE Page 40 with the single exception of one other State, Indiana stands alone in her adherence to this unwise, unjust and exclusive policy.

If there were no higher motives to urge us to do justice in this regard, the letter and spirit of our own Constitution would seem to make the path of duty so plain that none need err therein. The Constitution declares that "Knowledge and learning, generally diffused throughout a community, being essential to the preservation of free Government, it shall be the duty of the General Assembly to encourage, by all suitable means, moral, intellectual, scientific and agricultural improvement, and to provide by law, for a general and uniform system of common schools wherein tuition shall be without charge and equally open to all."

If a small tax is assessed by a township to prolong the school term, grave doubts are entertained as to whether the generality and uniformity of the system is not threatened with destruction ; but this plain, unambiguous phraseology, which leaves no room for construction, can be ignored with impunity because prejudice so decrees. It is true that a proviso to the first section of the school law of 1865 exempts colored persons from the State tax therein assessed for the support of common schools; but they are taxed for the building of school houses for our children. The exemption in the proviso above alluded to is as clearly in contravention of the Constitution as is the exclusion of colored persons from the educational advantages intended for all.

On the subject of taxation the Constitution is very explicit. It declares "that the General Assembly shall provide by law for a uniform and equal rate of assessment and taxation, and shall prescribe such regulations as shall secure a just valuation for taxation of ALL PROPERTY both real and personal excepting such only for municipal, educational, literary, scientific, religious or charitable purposes as may be specifically exempt by law. The property of the colored people does not come within this exception, and the General Assembly has no power to enlarge the exemption. It is a question of justice, and of complying with the requirements of our own Constitution, and I trust it will be fairly met, and decided in favor of justice and of the observance of the Constitution.

The precise manner in which the colored people shall be secured in their educational rights, is a question of minor importance, and one on which we can derive assistance from the experience of other States, in which the question has arisen and been settled.

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AGRICULTURAL COLLEGE.

On the 9th day of April, 1867, the land scrip which had been issued by the Secretary of the Interior to this State, under the Act of Congress of July 2d, 1862, entitled, "An Act donating lands to the several states and territories which may provide colleges for the benefit of agriculture and the mechanic arts," was disposed of by the Treasurer of the Board of Trustees of the Indiana Agricultural College under the direction of said Board, in pursuance of the requirements of the fifth section of the Act of the General Assembly accepting the grant, approved March 6, 1865.

The Board of Trustees advertised for sealed proposals for the purchase of the scrip in such quantities or parcels as seemed most likely to secure competition. Quite a number of bids were received, and the scrip was sold in five several parcels to the highest bidders, and embraced three hundred and ninety thousand acres of land. The aggregate of all the sales was two hundred and twelve thousand, two hundred and thirty-eight dollars, and fifty cents, or about fifty-four and a half cents for each acre of land represented by the scrip. The entire proceeds of the scrip was, as soon as practicable after the sale, invested in the five-twenty bonds of the United States. Since the making of this investment, interest has been collected by the Treasurer of the Board on these bonds to the amount of $20,725 40, which, with the exception of $1,748 90 cash in the hands of the Treasurer, has been invested in like manner. The par value of the bonds held by the trust is $215,000. The market value at this time is estimated at $236,500, and if to this last named sum is added the cash in hands of the Treasurer, viz: $1,748 90, the entire fund is now of the value of $238,248 90. I respectfully submit a copy of the report of the Treasurer of the Board, to which you are referred for further information in relation to the sale of the scrip and the investment of the proceeds.

The original Act of Congress by which the donation was made, requires any State accepting the benefits of its provisions, to provide at least one college such as is described in the Act within five years from the passage of the Act, or in default thereof, the grant shall be forfeited, and the State shall be bound to pay to the United States the proceeds of the land or scrip received.

By a subsequent Act of Congress, approved July 23d, 1866, the time within which the States accepting the grant were required to es page: 42[View Page 42]Switch to Image ModeCLOSE Page 42 tablish colleges was extended for five years from the last named date. The time limited by this extension will expire in 1871, and hence it is important that some definite action should be taken on the subject by the General Assembly at its present session.

By the terms of the grant the fund is to remain undiminished forever, and the interest must be inviolably appropriated to the endowment, support and maintenance of at least one College, "where the leading object shall be, without excluding other scientific and classical studies, and including military tactics, to teach such branches of learning as are related to agriculture and the Mechanic arts, in such manner as the Legislature may prescribe in order to promote the liberal and practical education of the industrial classes in the several pursuits and professions of life."

By a subsequent section of the act of Congress an exception is made which allows a sum, not exceeding ten per centum of the fund, to be expended in the purchase of land for sites or experimental farms whenever authorized by the Legislature of the State; but this is coupled with an inhibition against the appropriation of any part of the fund to the purchase, erection or repair of any building or buildings.

To establish a College such as is described in the act of Congress would involve such a draft upon the State Treasury as I could not recommend at this time if it can be avoided.

Agricultural Colleges are as yet but experiments in this country, and it would be of great advantage to us if some arrangement could be made whereby action can be delayed until we can avail ourselves of the experience of other States now engaged in the establishment of such institutions. My own opinion is, that Congress should be memorialized to pass an act or joint resolution, permitting the State to apply the annual income of this fund to the support of Common Schools, until such time as the State is prepared, in juctice to other claims upon her resources, to provide the College centemplated by the grant. Or if this is not deemed advisable, to permit the State to add the annual income of the fund to the principal, by investing it in Government stocks until such time as the required College may be established. At former sessions of the General Assembly, three distinct plans of executing the trust were discussed. The first of these proposed making the College a Branch or Department of the State University. The second contemplated the establishment of a separate and independent Institution. The third suggested the division of the annual income of the fund equally among the State University page: 43[View Page 43]Switch to Image ModeCLOSE Page 43 and two, three or more, of the denominational Colleges and Universities in the State, upon the condition that each of the Institutions so favored should provide one or more professorships devoted to instruction in such branches as the act of Congress requires.

The proposition last named would, to my mind, be so plain a departure from the spirit and intention of the grant, and would, on other grounds, be of such doubtful expediency that I could not recommend its adoption. Should the General Assembly be of the same opinion, and also be averse to applying to Congress for permission to apply the income to the support of common schools, or to add it to the principal until such time as the State might be prepared to establish the College, the remaining choice would be between establishing a new institution and providing a College in connection with and as a branch of the State University.

The establishment of a new College, creditable to the State, would, I suppose, involve a draft upon the Treasury of the State to an amount nearly if not quite equal to the amount of the fund received from the General Government. But for this severe draft upon the Treasury, and the doubt which exists whether such institutions can be made useful to any considerable extent, I should prefer the establishment of a new institution to the plan of attaching the College to the University.

In view, however, of the fact that we are now engaged in the payment of the State debt, and in view of the large and urgent demands of institutions already established and, remembering that under existing circumstances, and in anticipation of possible contingencies, the public burdens ought to be diminished rather than increased, my own opinion is that it would be unwise at this time to make such appropriations as the establishment of a new College would involve. I suppose that an agricultural and mechanical department of instruction, such as would save the grant from forfeiture, might be established in connection with the State University at a comparatively small expense to the Treasury. If this is done the legislation should, in my judgment, be so shaped as to exclude the idea that the General Assembly might not, at some future time, if it should think proper to do so, make a different disposition of the fund. In other words, to prevent any pretext for a charge of bad faith, the right should be expressly reserved, to provide a new and independent Agricultural College, and to apply the income of the fund to its support, if experience should, page: 44[View Page 44]Switch to Image ModeCLOSE Page 44 in the opinion of the General Assembly, render such action expedient or proper.

I can, however, see no reason to fear the success of an application to Congress for permission to apply the income of the fund to the support of the common schools ; and experience has not yet proved that such an appropriation of the trust would not better tend "to promote the liberal and practical education of the industrial classes in the several pursuits and professions of life," than the establishment of an Agricultural and Mechanical College.

CONCLUSION.

Having thus performed what I conceive to be my duty in presenting to you information touching the condition of the State, and in recommending such measures as would in my opinion be promotive of its welfare, allow me to assure you of my sincere desire cordially to co-operate with you in all your efforts to advance the prosperity of the State and the happiness of its people, and to express the hope that your councils may be harmonious, and that your labors may result in lasting benefits and blessings to your constituents.

CONRAD BAKER.